rmation relevant to their business conditions, so that investors can get as much information as possible about making more informed decisions, which can ensure the orderly operation of securities market and improve its operational efficiency. In securities market, management of listed companies have a lot of inside information, when the management find that the publication of false information or the use of insider information to trade can bring them interests, although this will undermine the interests of investors, the management are still desperate to implement the act (Elliott and Elliott, 2015). To solve this problem, one of the solutions is through information disclosure to allow investors to understand business situation, investment decisions of management and other management activities in a timely manner, so that investors can externally supervise the management to ensure that management will effectively implement their obligations and safeguard the healthy operation of securities market.
2.2 Enron event
In 2001, accounting fraud of the largest US energy trader – Enron was found out and it filed for bankruptcy, causing a huge panic in the US capital market (Munawer, Yahya and Siti-Nabiha, 2012). Enron's problem lies in related-party transaction and information disclosure (Cullinan, 2004). Inappropriate related-party transactions were not enough to make Enron collapse in a few months, the real fatal was Enron’s error in information disclosure. In order to keep its global high speed growth and realize its huge expansion plans, Enron has to earn a lot of low-cost capital (Phadke, 2009). To do that, Enron must have a high credit rating. In order to achieve this goal, Enron underreported debt in the financial statements and overestimated profits (Cullinan, 2004). At the same time, Enron's disclosure to U.S. Securities and Exchange Commission about the related transactions with its partnership was not sufficient and accurate, which was too vague and difficult to be understood by the majority of investors (Munawer, Yahya and Siti-Nabiha, 2012). This near-intentional approach caused Enron’s losing market confidence after the occurrence of the Enron event. In the end, the serious consequences of false information disclosure caused the collapse of Enron.
2.3 Discussion
2.3.1 Defects in corporate governance structure
In order to solve the negative impact of information asymmetry, the international practice is to perfect corporate governance structure through power distribution, power balance, information disclosure and other mechanisms, but whether it is the system arrangement of corporate governance structure, or the mechanism design of executive stock option, both are inseparable from high-quality accounting information. In order to prevent insiders’ control and balance the power of management and large shareholders in terms of accounting information, in Britain, the United States and other developed countries, they have introduced an independent board system (International Accounting Standards Board, 2010). This corporate governance mode emphasizes the function of independent directors, of course, it has its reasonable ingredients, but the Enron event shows that independent directors are not omnipotent. Among the 17 directors of Enron, 15 were independent directors (Munawer Yahya and Siti-Nabiha, 2012). Enron's independent board of directors not only failed to fulfill their inter
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